still confused £1000 tax free interest on savings

polymaff

xylophone wrote: »

My old neighbour used to talk about having to pay supertax at nineteen shillings and sixpence in the pound....

Super Tax never went away, it just changed into the higher rates of income tax in 1973, rates that with IIS were as high as 98% - just about the figure you quote.

vigman

As The Beatles sang about shillings in Taxman "There's one for you, nineteen for me"!

Vigman

Supercar

On TV last night Martin said banks would advise tax man of interest exceeding £1000 so it could be taxed in year it is earned. Anybody know what happens if interest exceeds £1000 but is spread over several accounts which each earn less than £1000. Self Assess??

Nationwide8

Supercar wrote: »

On TV last night Martin said banks would advise tax man of interest exceeding £1000 so it could be taxed in year it is earned. Anybody know what happens if interest exceeds £1000 but is spread over several accounts which each earn less than £1000. Self Assess??

Would love to know the answer to this !...have had 2 letters so far from various banks saying interest will automatically be paid Gross from April So if you get interest above £1000 in a financial year and have income more than the allowance is HMRC going to be chasing EVERYONE for overpaid interest ?? How is that possible ?? Or will people who have never done a self assess have to all of a sudden do one end of financial year 2016- 17 ?

polymaff

Nationwide8 wrote: »

Would love to know the answer to this !...have had 2 letters so far from various banks saying interest will automatically be paid Gross from April So if you get interest above £1000 in a financial year and have income more than the allowance is HMRC going to be chasing EVERYONE for overpaid interest ?? How is that possible ?? Or will people who have never done a self assess have to all of a sudden do one end of financial year 2016- 17 ?

The responsibility for paying income tax owed by the due date has ALWAYS been that of the tax-payer. Gross payment of interest won't alter that at all. You are right, though, in pointing out that there will be a significant increase in the number of people who have to pay more attention to their tax affairs. I took this up with HMRC last June - along with the issue of the increasing number of people who would get caught up in the complex Payments on Account system. HMRCs immediate response was that they would address these issues latter in 2015. I believe HMRC's response has been recent guidance notes on their soon-to-be-launched digital tax initiative - and the populist buzz-phrase "The Death of Self-Assessment". They are suggesting that, as they believe that they now have access to the overwhelming bulk of income data, they will populate your personal digital tax account and report the tax due, in real time. In their rather partisan publications they give results of their research in terms of "many taxpayers interviewed said that they would welcome the opportunity to settle their tax affairs quarterly, or even monrthly" - Huh! Take this as a hint that HMRC will press for quarterly or even monthly due dates.

What HMRC will be doing when this is all in place is not just chasing for tax unpaid but also for late payment penalties - up to twelve times a year,

All part of HMRC's policy to get more money in sooner

YorkshireBoy

Supercar wrote: »

On TV last night Martin said banks would advise tax man of interest exceeding £1000

No he didn't. Banks will report all interest paid, not just that which exceeds £1K. Maybe watch it again on catch up?

2010

Do banks also report interest paid on cash ISA?

colsten

polymaff wrote: »

The responsibility for paying income tax owed by the due date has ALWAYS been that of the tax-payer. Gross payment of interest won't alter that at all. You are right, though, in pointing out that there will be a significant increase in the number of people who have to pay more attention to their tax affairs.

It can't be a bad thing if a few more, better-off, people take a bit more interest in their tax affairs to help those not so well off to pay a little bit less tax, can it? At least 95% of all savers earn less than £1,000 in interest each year, particularly whilst the very low interest rates are still with us. Also, it can't be bad if those who might have "forgotten" to tell the HMRC that they should pay higher rate tax on their savings will be reminded that they owe.

polymaff wrote: »

Take this as a hint that HMRC will press for quarterly or even monthly due dates.

Which still works in favour of those savers that go over the allowance. Under current rules, 20% tax gets deducted at the time of interest payment. In future, any tax will be due at a later stage, even it that might be only a slightly later stage.

On top of all this, those on lower incomes no longer need to raise their R85s (or their R40s). Less effort for them, less effort & costs for the banks and for the HMRC. Plus those who never even knew about R85s will automatically not pay tax on their savings.

I am one of the ones who needs to declare interest over £1,000 and believe the new system is fairer all round for just about everybody.

colsten

2010 wrote: »

Do banks also report interest paid on cash ISA?

Banks have reported ISA details on an annual basis since ISAs were first launched 16 years ago. But the interest on your ISA is not taxable so will not count towards the personal savings allowance.

Nationwide8

Hmm Thanks for the answers,interesting...my income from salary/pension was about £10700 2015-2016 but I did pay some tax on that so ( I assume) am due a rebate after April 2016....I earned interest from various accounts ( Gross ) but not to take me above £15600...and 2016-2017...total pension/income won't be above £16000 anyway so...

But if I was earning more than £ 16000 ( or whatever it is in 2016 -2017 ) and had more than £1000 in interest I'd be worrying about the HMRC chasing me unless I filled in a self assess form....even if the idea is they "automatically" will somehow get overpaid interest back.
I mean where do they plan to automatically get it from ??? Direct from the person ? Via a letter demanding payment ?

...and will HMRC know if you earn more than £1000 interest from multiple banks and not just one ?

...Will they chase people who earn above what's allowed and say earn £1400 in interest...Chase them for 20% of £400 ie £80 ?